Runway is not bank balance divided by last month’s expense. Timing, restrictions and commitments matter.
CFO or finance lead
Weekly cash, monthly board view
Reconcile opening cash to banks.
Bank reconciliation.
Begin with cash the company can legally and operationally use. Customer deposits, escrow balances, restricted grants, security deposits and borrowed funds with covenants may not be freely available.
Forecast receipts by probability and date rather than invoice value. Then map payroll, vendors, taxes, debt, refunds, capital expenditure and contractual minimums by payment date.
Use base, downside and severe scenarios. Funding should not be treated as cash until documents, conditions and transfer are sufficiently certain. A delayed round can consume several months of runway.
| Control | What it covers | Operating rule |
|---|---|---|
| Opening liquidity | Unrestricted cash and near-cash available. | Separate restricted balances. |
| Cash inflow | Collections, funding and other receipts by date. | Apply probability and delay. |
| Cash outflow | Payroll, vendors, taxes, debt and capex. | Include committed but unbilled costs. |
| Runway trigger | Month cash falls below operating minimum. | Define actions before that date. |
Define a minimum operating cash floor rather than planning to reach zero. The floor should cover payroll, statutory payments, customer obligations and an orderly wind-down or restructuring period.
Link runway triggers to decisions: hiring freeze, discretionary spend, pricing, collections, bridge funding, board escalation and professional advice.
Document the decision, owner, due date and evidence expected. A verbal explanation should be converted into a board note, approved working, contract amendment, portal acknowledgement or reconciliation before the item is treated as closed.
Rules, forms, thresholds and interpretations can change. The operating team should use the latest official source and the actual company facts instead of copying a control from another entity or prior year.
Ask four questions: Is the obligation or accounting treatment applicable? Has the underlying transaction been completely recorded? Does the evidence agree with the books and portal? Has an independent reviewer challenged the exception?
The review should distinguish a timing difference from an error, a judgement from a missing document, and a control failure from a one-time operational delay. Repeated small exceptions deserve root-cause action because they often become material during audit, fundraising, notice or distress.
The operating record should connect the control stages—opening liquidity, cash inflow, cash outflow, runway trigger—to the same transaction population. If the source list, accounting ledger, tax return, board record and management dashboard use different populations, the review can appear complete while exceptions remain outside the test.
Management should define an exception threshold, but the threshold must not hide repeated failures. A small error occurring every month can signal weak master data, unclear ownership or a broken interface. The reviewer should record root cause, immediate correction and preventive action separately.
Closure requires evidence. At minimum, the file should show who prepared the work, who reviewed it, which source documents were used, what differences remained and when the next follow-up is due. Screenshots without context or spreadsheets without source references are not a durable control record.
Finance should reconcile the operational schedule to the general ledger and explain every reconciling item by amount, age and owner. Manual journals, overrides and post-close changes deserve heightened review because they can bypass the normal transaction flow.
The board view should separate reported results from estimates and management metrics. When a KPI does not follow the statutory accounting framework, provide a stable definition and a bridge to the closest financial statement line so the measure cannot be changed silently.